Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-20345
FIRST CHURCH FINANCING CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1670677
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 North Main Street, West Bend, Wisconsin 53095
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 334-5521
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes ( X ) No ( )
The number of shares outstanding of the registrant's Common Stock, par
value $1.00 per share, at June 30, 1996 was 1,000 shares.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(a)
and (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
<PAGE>
PART I
FIRST CHURCH FINANCING CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
June 30, June 30,
1996 1995
<S> <C> <C>
Revenues:
Interest income $251,718 $191,868
Other income 17,443 12,089
Total revenues 269,161 203,957
Expenses:
Interest expense 222,744 170,288
Amortization of deferred issuance
costs 12,127 5,516
Servicing fees 9,603 7,187
Other 3,149 5,176
Total expenses 247,623 188,167
Income before income taxes 21,538 15,790
Provision for income taxes 8,400 6,300
Net income $ 13,138 $ 9,490
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these statements.
<PAGE>
FIRST CHURCH FINANCING CORPORATION
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30, June 30,
1996 1995
<S> <C> <C>
Revenues:
Interest income $517,556 $392,576
Other income 70,526 45,370
Total revenues 588,082 437,946
Expenses:
Interest expense 460,725 349,938
Amortization of deferred issuance
costs 61,235 32,958
Servicing fees 20,025 14,842
Other 15,399 12,974
Total expenses 557,384 410,712
Income before income taxes 30,698 27,234
Provision for income taxes 12,000 10,900
Net income $ 18,698 $ 16,334
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these statements.
<PAGE>
FIRST CHURCH FINANCING CORPORATION
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,956 $ 9,366
Assets held by trustee 303,687 360,424
Accrued interest receivable 83,311 71,045
Mortgage loans held by trustee
(net of purchase discount of
$372,790 and $432,437,
respectively) 10,456,321 11,727,624
Deferred issuance costs 371,573 432,808
Other assets 12,560 16,328
Total assets $11,229,408 $12,617,595
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest payable $ 234,650 $ 276,768
Mortgage-Backed bonds payable 10,549,000 11,897,000
Due to affiliate 2,934 200
Note payable to affiliate 85,000 90,000
Accrued income taxes payable 2,707 17,207
Total liabilities 10,874,291 12,281,175
Stockholder's equity
Common stock, $1 par value;
50,000 shares authorized
1,000 shares issued and
outstanding 1,000 1,000
Additional paid-in capital 269,631 269,631
Retained earnings 84,486 65,789
Total stockholder's equity 355,117 336,420
Total liabilities and
stockholder's equity $11,229,408 $12,617,595
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these balance sheets.
<PAGE>
FIRST CHURCH FINANCING CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30, June 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 18,698 $ 16,334
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Gain on liquidation of mortgage
loans (45,032) (21,329)
Amortization of discount on
mortgage loans (14,614) (10,911)
Amortization of deferred
issuance costs 61,235 32,958
Amortization of other deferred
costs 3,766 3,768
Change in assets and liabilities:
Decrease (Increase) in -
Assets held by trustee 56,737 (14,060)
Accrued interest receivable (12,266) 4,802
Increase (Decrease) in -
Accrued interest payable (42,118) (17,941)
Due to affiliate 2,734 (2,344)
Accrued income taxes payable (14,500) 8,400
Net cash provided by (used in)
operating activities 14,640 (323)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from -
Principal payments received on
mortgage loans 1,330,950 620,656
Net cash provided by
investing activities 1,330,950 620,656
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for -
Repayment of mortgage-backed bonds (1,348,000) (627,000)
Net repayments on notes payable
to affiliate (5,000) -
Net cash used in financing
activities (1,353,000) (627,000)
NET DECREASE IN CASH AND
CASH EQUIVALENTS (7,410) (6,667)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 9,366 6,802
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 1,956 $ 135
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Interest paid during the period $ 503,000 $368,000
Income taxes paid during the period$ 26,500 $ 2,500
</TABLE>
The accompanying notes to condensed financial statements
are an integral part of these statements.
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1996
Note A -- Basis of Presentation
The condensed financial statements included herein have been prepared by
First Church Financing Corporation (the "Company"), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. Management believes, however, that these condensed financial
statements reflect all adjustments which are, in the opinion of management,
necessary to provide a fair statement of the results for the periods
presented. All such adjustments are of a normal recurring nature. It is
suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
Note B -- Mortgage-Backed Bonds
Mortgage-Backed Bonds (the "Bonds") originally issued and outstanding at
June 30, 1996, consist of the following:
<TABLE>
<CAPTION>
Outstanding
Principal
Original Amount
Date of Stated Principal at
Series Rate Bonds Maturity Amounts 6/30/96
<C> <C> <C> <C> <C> <C>
1 8.25% 3/1/93 3/10/08 $ 4,586,000 $ 2,964,000
2 8.75% 8/1/94 8/10/09 4,456,000 3,443,000
3 8.00% 12/1/95 12/10/10 4,223,000 4,142,000
$13,265,000 $10,549,000
</TABLE>
The stated maturity is the date by which all Bonds will be fully paid.
Mandatory redemptions will be made from principal payments on the Mortgage
Loans (the "Loans") which serve as collateral for the Bonds. The Loans
generally require regular installments of principal and interest based upon
a 15-year amortization schedule. The receipt of scheduled principal
payments will cause a substantial portion of the Bonds to have shorter
maturities.
The Bonds will be redeemed, without premium or penalty, to the extent
funds are available in the interest and principal payment accounts
maintained by the trustee. Redemptions from such available funds (other
than funds from prepayments of Loans) commence six months from the date of
issue of a Bond series and continue on a semiannual basis thereafter.
All interest and principal collected on the Loans, less a servicing fee
paid to Ziegler Financing Corporation, a related entity, is to be deposited
with the trustee of the Bonds. Any amounts deposited with the trustee in
excess of amounts required for payment of interest on and principal of the
Bonds and an amount to be maintained in an interest reserve fund will be
returned to the Company.
The Bonds of any series may be redeemed in whole by the Company at such
time as the aggregate principal amount of the outstanding Bonds for the
series is 20% or less of the aggregate principal amount of the Bonds
originally issued for that series. Redemptions will also be made from
unscheduled prepayments on the Loans, if such prepayments should occur.
Prepayments over and above the regular principal installments may be made
by the mortgagor from borrowed funds on a monthly or quarterly basis
commencing one year after the issue of a Bond series and from unborrowed
funds on a monthly or quarterly basis after the issue of a Bond series.
Redemptions from such prepayments may be made after the same periods of
time.
<PAGE>
MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
Results of Operations - Three Months Ended
June 30, 1996 and 1995
The Company issued no new Bonds during the second quarter of 1996 or
1995. A total of $141,000 of Bonds were repaid during the second quarter
of 1996 compared to $5,000 in the second quarter of 1995. The difference
in Bond repayments during each of the second quarter periods is due to
different prepayment amounts received on the Loans.
Revenues, consisting primarily of interest, were $269,000 in the
second quarter of 1996 compared to $204,000 in the second quarter of 1995.
Total expenses, consisting primarily of interest, were $248,000 in the
second quarter of 1996 compared to $188,000 in the second quarter of 1995.
The increases in revenues and expenses for the second quarter of 1996
compared to the second quarter of 1995 are due to a third series of Bonds
which was issued in December 1995. Net income for the second quarter of
1996 was $13,000 compared to $9,000 in the second quarter of 1995.
<PAGE>
MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
Results of Operations - Six Months Ended
June 30, 1996 and 1995
The Company issued no new series of Bonds in the first six months of
1996 or 1995. A total of $1,348,000 of Bonds were repaid during the first
six months of 1996 compared to $627,000 in the first six months of 1995.
The difference in Bond repayments during each period is due to different
prepayment amounts received on the Loans.
Revenues, consisting primarily of interest income, were $588,000 in
1996 compared to $438,000 in 1995. Total expenses, consisting primarily of
interest expense, were $557,000 in 1996 compared to $411,000 in 1995. The
increases in revenues and expenses for the first six months of 1996
compared to the first six months of 1995 are due to the third series of
Bonds outstanding which was issued in December 1995. Net income for the
first six months of 1996 was $19,000 compared to $16,000 for the first six
months of 1995.
Each series of Bonds is structured in a manner such that funds to be
received from the Loans are sufficient to fund interest and principal
payments on the Bonds as well as all other expenses of the Company. All
payments of principal and interest on the Loans securing the Bonds have
been received by the Company as scheduled. Principal payments including
any prepayments received on the Loans were $1,331,000 in the first six
months of 1996 compared to $621,000 in the first six months of 1995.
Ziegler Financing Corporation, a related corporation, acts as servicer for
the Loans for which it receives a fee. The fee is equal to 0.292% of the
average outstanding principal balance of the Loans during the preceding
month. At June 30, 1996, there were $10,549,000 of Bonds outstanding
collateralized by $10,829,000 of Loans at maturity value.
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. Description
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
FIRST CHURCH FINANCING CORPORATION
Dated: August 13, 1996 By
Eugene H. Rudnicki
President
Dated: August 13, 1996 By
Lynn R. Van Horn
Secretary & Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from First
Church Financing Corporation financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,956
<SECURITIES> 0
<RECEIVABLES> 10,456,321<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,229,408
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 10,549,000
0
0
<COMMON> 1,000
<OTHER-SE> 354,117
<TOTAL-LIABILITY-AND-EQUITY> 11,229,408
<SALES> 0
<TOTAL-REVENUES> 588,082
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 96,659
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 460,725
<INCOME-PRETAX> 30,698
<INCOME-TAX> 12,000
<INCOME-CONTINUING> 18,698
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,698
<EPS-PRIMARY> 0<F3>
<EPS-DILUTED> 0<F3>
<FN>
<F1>Mortgage loans net of purchase discount.
<F2>Registrant has an unclassified balance sheet.
<F3>Not applicable.
</FN>
</TABLE>
